Numsa scores landmark ConCourt win on labour brokers

The National Union of Metalworkers of South Africa hopes a new Constitutional Court judgment will be the "death knell" for the entire labour broker industry.

The Constitutional Court ruled by majority decision in favour of the National Union of Metalworkers of SA in a case relating to the ongoing debate about who should be regarded as the employer of workers placed in jobs by labour brokers under certain legal circumstances.

In a statement on Thursday, Numsa said it welcomed the decision of the Constitutional Court as the judgement strengthens the rights of temporary workers.

"This is a major victory for casual and temporary workers who are abused by labour brokers. We view this as the first step in ending the labour brokering system in SA," said the union's acting spokesperson, Phakamile Hlubi-Majola.

"Our experience with labour brokers is that they are extremely abusive and expose workers to low wages and terrible working conditions."

Ruling

Jacques van Wyk, director and labour specialist at Werksmans Attorneys, says the Constitutional Court decision effectively means the company or business where a worker is placed by a labour broker becomes the sole employer of that worker upon completion of three months of service, if that employee earns below R205 433.30 a year.

In the case at hand, Assign Services, a temporary employment service, placed 22 workers at Krost for a period in excess of three months on a full-time basis. These workers fell within the scope of the application of the Labour Relations Act (LRA).

In this case, the court was to decide whether such a company or business that used the services of a labour broker indeed became the sole employer of the placed workers upon completion of three months of service by the employees, or whether the company or business and labour broker both became the employers (the dual employment interpretation).

"The matter ran the full course from the Commission for Conciliation, Mediation and Arbitration (CCMA) to the Constitutional Court," says Van Wyk.

"The CCMA favoured the sole employment interpretation, holding that the deeming provision of the LRA should be interpreted to mean that the client becomes the sole employer of the placed workers once the threshold of the three-month period elapses."

Van Wyk says the CCMA commissioner reasoned that the sole employment interpretation afforded greater protection for the vulnerable class of employees. On review, the CCMA's decision was set aside by the Labour Court.

According to Van Wyk, the Labour Court adopted the dual employment interpretation, reasoning that nothing in the deeming provision invalidated the contract of employment between the TES and the placed workers.

The Labour Court held that the employment relationship between the TES and the placed workers, which arose from the contract of employment, operated in parallel to the statutory employment relationship between the client and the placed workers created by the deeming provision of the LRA.

The Labour Appeal Court (LAC) in turn overturned the Labour Court's judgement, restoring the CCMA's ruling in favour of the sole employment interpretation.

"The LAC concluded that the LRA, interpreted in context, unambiguously supports the sole employer interpretation and is in line with the purpose of the amendment, the primary object of the LRA and protects the rights of placed workers," says Van Wyk.

And now the Constitutional Court dismissed the appeal by Assign Services, restoring the LAC position.

Van Wyk says the Constitutional Court interpreted the deeming provision in light of certain sections of the LRA as a whole, "and giving effect to the purpose of the Amendment Bill, favoured the sole employment interpretation".

"Is there an ulterior motive behind the trade unions' resistance to labour brokers, notwithstanding ample protection against exploitation of vulnerable workers provided for in employment legislation?" Pienaar told Fin24 at the time.

"In the face of the uncertain global economy, many businesses locally and internationally focus beyond the traditional employer-employee model and place reliance on third-party service providers or independent contractors like labour brokers," Pienaar told Fin24.

In his view, the intention of amendments to the LRA in 2015 was to provide additional protection to temporary employees who earn below the earnings threshold (currently R205 433.30 per year) and who have been placed with a client of a labour broker for longer than three months.

While Numsa - and now the Constitutional Court - favours the view that once the deeming clause kicks in, the temporary employees are effectively "transferred" to the client of the labour broker. In this view, the client becomes the sole employer, thereby effectively resulting in a "ban" on labour brokers.

The contrary approach, preferred by Pienaar, is that a dual employment relationship is created after a three-month period, with both the labour broker and the client being jointly regarded as "employers".

According to this interpretation of the "joint and several liability" provisions, a person who was unfairly dismissed, can then hold both the labour broker and its client responsible. Pienaar said this would be in sync with the wording of the relevant provisions in the act.

"What is important here is that there is no provision in the Act for the transfer of the employees to the client of the labour broker. The act does not use the word 'transfer' and nowhere in international law are employees deemed to be 'transferred' after three months," explained Pienaar at the time.